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On the Behavior of Proposers in Ultimatum Games

  • Thomas Brenner
  • Nicolaas J. Vriend

    ()

We demonstrate that one should not expect convergence of the proposals to the subgame perfect Nash equilibrium offer in standard ultimatum games. First, imposing strict experimental control of the behavior of the receiving players and focusing on the behavior of the proposers, we show experimentally that proposers do not learn to make the expected-payoff-maximizing offer. Second, considering a range of learning theories (from optimal to boundedly rational), we explain that this is an inherent feature of the learning task faced by the proposers, and we provide some insights into the actual learning behavior of the experimental subjects. This explanation for the lack of convergence to the subgame perfect Nash equilibrium in ultimatum games complements most alternative explanations.

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Paper provided by Cognitive and Experimental Economics Laboratory, Department of Economics, University of Trento, Italia in its series CEEL Working Papers with number 0304.

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Date of creation: 2003
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Handle: RePEc:trn:utwpce:0304
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Web page: http://www-ceel.economia.unitn.it

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  1. Matthew Rabin, 2001. "Risk Aversion and Expected-Utility Theory: A Calibration Theorem," Method and Hist of Econ Thought 0012001, EconWPA.
  2. Vriend, Nicolaas J., 1997. "Will reasoning improve learning?," Economics Letters, Elsevier, vol. 55(1), pages 9-18, August.
  3. David Cooper & Nick Feltovich & Alvin Roth & Rami Zwick, 2003. "Relative versus Absolute Speed of Adjustment in Strategic Environments: Responder Behavior in Ultimatum Games," Experimental Economics, Springer, vol. 6(2), pages 181-207, October.
  4. Guth, Werner & Tietz, Reinhard, 1990. "Ultimatum bargaining behavior : A survey and comparison of experimental results," Journal of Economic Psychology, Elsevier, vol. 11(3), pages 417-449, September.
  5. Guth, Werner & Schmittberger, Rolf & Schwarze, Bernd, 1982. "An experimental analysis of ultimatum bargaining," Journal of Economic Behavior & Organization, Elsevier, vol. 3(4), pages 367-388, December.
  6. Brezzi, Monica & Lai, Tze Leung, 2002. "Optimal learning and experimentation in bandit problems," Journal of Economic Dynamics and Control, Elsevier, vol. 27(1), pages 87-108, November.
  7. repec:att:wimass:9325 is not listed on IDEAS
  8. Bergemann, Dirk & Valimaki, Juuso, 2001. "Stationary multi-choice bandit problems," Journal of Economic Dynamics and Control, Elsevier, vol. 25(10), pages 1585-1594, October.
  9. Werner Guth & Reinhard Tietz, 1997. "Ultimatum bargaining behavior: a survey and comparison of experimental results," Levine's Working Paper Archive 1160, David K. Levine.
  10. Gary E. Bolton & Rami Zwick & Elena Katok, 1998. "Dictator game giving: Rules of fairness versus acts of kindness," International Journal of Game Theory, Springer, vol. 27(2), pages 269-299.
  11. Thaler, Richard H, 1988. "The Ultimatum Game," Journal of Economic Perspectives, American Economic Association, vol. 2(4), pages 195-206, Fall.
  12. Sarin, Rajiv & Vahid, Farshid, 1999. "Payoff Assessments without Probabilities: A Simple Dynamic Model of Choice," Games and Economic Behavior, Elsevier, vol. 28(2), pages 294-309, August.
  13. Roth, Alvin E. & Erev, Ido, 1995. "Learning in extensive-form games: Experimental data and simple dynamic models in the intermediate term," Games and Economic Behavior, Elsevier, vol. 8(1), pages 164-212.
  14. Gale, John & Binmore, Kenneth G. & Samuelson, Larry, 1995. "Learning to be imperfect: The ultimatum game," Games and Economic Behavior, Elsevier, vol. 8(1), pages 56-90.
  15. Forsythe Robert & Horowitz Joel L. & Savin N. E. & Sefton Martin, 1994. "Fairness in Simple Bargaining Experiments," Games and Economic Behavior, Elsevier, vol. 6(3), pages 347-369, May.
  16. Selten, Reinhard & Stoecker, Rolf, 1986. "End behavior in sequences of finite Prisoner's Dilemma supergames A learning theory approach," Journal of Economic Behavior & Organization, Elsevier, vol. 7(1), pages 47-70, March.
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